This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers, click the "Reprints" link at the bottom of any article.

July 19, 2012

Note to LIMRA: Marketing Research by Any Other Name...

First, a personal note to the folks at LIMRA: rethink the name, guys. Sure, the acronym LIMRA is kind of catchy, but do you really need to broadcast that all the information you’re publishing falls under the category of “marketing research?" Back in the ‘60s, “marketing” was the cool new trend in savvy business management that dealt with esoteric subjects such as branding, market research and focus groups. But in today’s cynical world, marketing is synonymous with pseudo-sophisticated sales techniques, and “marketing research” is seen as either an oxymoron or a punch line.

Now I’m no marketing expert, but over the years, I’ve been subjected to enough marketing “research” to feel like one. So lest I be accused of participating in today’s national pastime of offering criticism sans solutions, here are few modest suggestions for more positive monikers: Financial Life and Investment Planning Economic Research, or FLIPER, has a nice ring to it; as does the Personal Research Organization for Finance and Life Economics (PROFILE). But my personal favorite, with a nod to those who like the sound of LIMRA, is the Life Insurance Management and Research Information Coalition, or LIMRIC, which has, I think, a nice lilt.

The reason I bring this up is that the name of an organization plays an important role in its, well, marketing. Notice, for instance, that there is no mention of broker-dealers in the Financial Services Institute, so they can claim to speak for the independent financial advisors who affiliate with its member firms. Or the Financial Industry Regulatory Authority, which was founded as the National Association of Securities Dealers, but thanks to the name change (after its 2007 merger with NYSE Regulation, Inc.) can now claim it’s not an SRO. And when you come out with a survey that claims to show “Advisors Positively Influence Consumers’ Behavior and Sentiment Toward Preparing for Retirement” such as LIMRA’s release last week, people will have some confidence it’s more than just a thinly veiled attempt to drive more customers to life agents.

Despite its potential credibility problems, LIMRA’s survey did yield some interesting results. For example, the marquee data showed that “61% of consumers who worked with an advisor contributed to a retirement plan or an IRA, while only 38% of consumers who weren't working with an advisor were contributing to their retirement savings.” This of course led to the headline conclusion that people who work with advisors are better off, which seems fair, as far as it goes.

But my skewed mind also tends to think about what surveys don’t show. For instance, that 38% of people who don’t have advisors are saving for retirement. This seems like a strikingly high number to me, considering that we’re constantly hearing from the media that Americans aren’t saving for the future, especially considering that some portion of the remaining 62% probably have a defined benefit plan at work, and another chunk are probably too young to start thinking about the end game.

On the other side of LIMRA’s data, I find the 62% of advisory clients who are socking money away interesting but for the opposite reason: Only six out of 10 clients are saving for retirement? What the heck are their advisors telling the other four out of 10? I mean, that’s barely over half—which means just over six out of 10 advisors are able to convince their clients to save! Sounds more like a commercial for advisor training to me.

LIMRA’s other interesting bit of data is this: “71% of Americans who work with financial advisors were confident they are saving enough for retirement, while only 43% of those who don't work with advisors were confident that they are currently saving enough to last throughout their retirement years.” An I the only one who finds it odd that seven out of 10 clients are confident about retirement readiness, when only six out of 10 are saving for retirement? What kind of advice are the missing 10% getting? While for non-clients, the delusional gap is only 43% confident vs. 38% saving: might one conclude from this that an advisor in fact makes people less realistic?

As someone who’s made a career around helping independent advisors better serve their clients and make a living doing it, I’d like to believe people who work with advisors are better off than those who don’t. But I’ve also come to believe that much depends on the particular advisor. Since this is a LIMRA survey (honestly, wouldn’t LIMRIC just sound better here?), one can only guess that the majority of “advisors” surveyed are insurance agents and brokers. Still, 61% of clients saving for retirement? Really? One can only believe that the percentage of financial planner clients would be quite a bit higher: Perhaps a better name would be The Financial Industry Disclosure Organization, or FIDO.